I would like to wish everyone a happy New Year.

Last year, while the global economy continued to show signs of recovery, international tensions persisted in Ukraine, the Middle East, and other regions. Additionally, there is heightened attention on policy trends by new administrations in Japan, the United States, South Korea and other countries regarding economic policies, diplomacy, and security, making the business environment increasingly uncertain.

In Japan as well, the 2024 Noto Peninsula Earthquake raised awareness of disaster prevention and BCP measures, while issues such as labor shortages, measures against rising prices, social security including childcare support, and environmental problems remain challenges.

NTN, as a bearing manufacturer, will contribute toward a sustainable society by perfecting technologies that prevent our customers' machinery from stopping. By utilizing bearing technology that reduces friction to the extreme and promotes energy conservation, we will develop products that have a low environmental impact and can be used for a long time. Furthermore, through services and solutions such as condition monitoring that utilize AI and sensors, we will contribute to appropriate machinery maintenance and lead to the realization of sustainable equipment.

Last year, we launched our new Medium-term Management Plan “DRIVE NTN100” Final. To complete the revitalization of NTN, we will work on finalizing reforms over three years until fiscal year 2026. We will change our organizational structure from the previous market-based system to one that is product-based, accelerate structural reforms, and aim to strengthen our earning power. We will focus particularly on the following measures to strengthen our business activities and management foundation:

· Expansion of Aftermarket Business

In April last year, we reorganized and consolidated our bearing business. By integrating OEM and aftermarket operations, we will optimize production capacity while continuing to expand our bestselling inventory and product lineup to strengthen our product supply capabilities.

Furthermore, as bearing experts, we will establish a system to support bearing lifecycle management for our customers, from product supply to condition monitoring, diagnostic and analysis services, maintenance proposals and technical training, to the provision of replacement parts, based on the technology and track record we have cultivated over many years. We will work to improve reliability and brand strength by providing all bearing-related solutions while addressing our customers' concerns.

· Strengthening Competitiveness of the OEM Business

We will strengthen our competitiveness by focusing on cash flow-oriented business operations and providing value that meets market needs. Responding to the shift toward EVs and automotive electrification, we have developed high-performance bearing products with “high speed rotation,” “electrical pitting-resistant” and “creep-resistant” functions, as well as drive shafts that have achieved world-class high efficiency and low vibration.

Additionally, we have developed products such as “High Speed and Long Operating Life Grease” for grease lubricated bearings used in machine tool spindles, where demand is increasing due to the improvement of productivity and energy saving, and we are making proposals to the market. Furthermore, the special heat treatment technology “HA-C” announced last year, which achieves the industry's highest level in high load capacity, will be proposed to various fields in the future as a technology that contributes to downsizing, lightening, and saving energy--not only for drive units for automobiles including e-Axle for electric vehicles (EVs), but also for various industrial machinery.

We will promote value chain reform from both aspects of Engineering Chain Management (ECM), which reviews design and quality processes, and Supply Chain Management (SCM), which includes the development of new suppliers, streamlining production, and the digitalization of manufacturing work, to work on cost reduction and the improvement of productivity.

· Evolution of ESG Management

We will evolve our ESG management to achieve sustainable growth. Among these efforts, our human resources strategy is based on “prosperous human development,” and we will advance initiatives from both the perspectives of securing and developing human resources and fostering an organizational culture. Last year, we adopted a job-standard manager personnel system. While working to enhance the technical capabilities required to achieve the management strategy, we will expand career development support measures for each employee and secure and develop diverse human resources. Additionally, we will enhance employee engagement through workplace improvement activities and continue town hall meetings by management to foster an organizational culture of daring and mission.

In this second year of our Medium-term Management Plan, we will accelerate the transformation of our business structure and management foundation toward achieving our final three-year targets and cultivate an organizational culture where all employees work together to enhance corporate value.

In closing, I wish everyone good health in the coming year.

Eiichi Ukai
CEO
NTN Corporation